US DFARS Rules Ban Chinese Rare Earths from 2027, Straining Defense Supply Chains
NOC•China placed seven heavy rare earths, including dysprosium and terbium, under export licensing in April 2025, driving terbium prices 103% higher year-to-date. New DFARS rules effective Jan.1, 2027 will ban Chinese-origin rare earths from US defense supply chains, pressuring Northrop Grumman’s sourcing.
1. China's Tightened Rare Earth Controls
In April 2025, Beijing placed seven heavy rare earth elements including dysprosium and terbium under export licensing, following earlier restrictions on antimony and gallium. These measures have already sent terbium prices up 103% year-to-date and reduced China’s rare earth magnet exports to the US by 22.5% in early 2026.
2. Pentagon’s DFARS Deadlines
The new Defense Federal Acquisition Regulation Supplement rules take effect January 1, 2027, prohibiting any Chinese-origin rare earths across the entire US defense supply chain. Billions in annual Pentagon contracts will require full compliance, forcing primes to certify clean sourcing for mining through finished products.
3. Impact on Northrop Grumman’s Supply Chain
Northrop Grumman’s fighter jet engines, missile guidance systems and drone motors rely on heavy rare earth magnets containing dysprosium and terbium. The DFARS ban creates urgent pressure to secure non-Chinese materials or face contract ineligibility and potential production delays.
4. Rise of Non-Chinese Rare Earth Suppliers
REalloys holds an exclusive 80% offtake agreement with North America’s sole non-Chinese heavy rare earth processing plant and operates a metallization facility in Ohio. Its diversified feedstock sources across the US, Canada, Brazil, Kazakhstan and Greenland position it as a leading compliant supplier for defense primes.
